In
reaction to its concern for perceived tax abuses, the U.S. Treasury Department
has issued new regulations with regard to written tax advice. These new regulations affect all written
communications between a tax professional and their clients.
We
now must choose between two alternatives when we give you written tax
advice. Neither alternative is
particularly desirable. We can always
give you a thorough, formal tax opinion.
That opinion must address each issue inherent in the transaction. This opinion will be time consuming and
therefore expensive for us to produce.
Our other choice is to include a statement to any tax advice that states
that you may not rely on this written advice to avoid any penalties that
potentially could be imposed in connection to the transaction.
In
as much as we believe that you rely on us to give you quick, reliable, yet cost
effective answers, we will provide an informal opinion with the required IRS
statement for most transactions. We
certainly will accommodate any requests for a formal, extensive opinion if you
deem it necessary, but we anticipate that this will be the exception rather
than the rule due to the additional costs involved.
As
the result of these new regulations, we have implemented a policy that all
letters, emails, faxes and tax memos will contain the following notation:
“To comply with the requirements imposed by the IRS
under Circular 230, we are disclosing that any tax advice contained within this
correspondence or any attachments to this correspondence is not intended, nor
was written to be used, and cannot be used, for the purpose of avoiding any
potential penalties under the Internal Revenue Code.”
The statement does express that the written advice cannot in and
of itself be used to avoid IRS penalties; however, you will continue to have
other defenses to the imposition of penalties.
We do not want to imply that our tax advice is somehow not reliable. This statement is required by the
regulations. We will continue to make
it our responsibility to provide accurate and timely tax advice. We will continue to use the same care and
high standards that you have come to expect from us.
If you have any questions concerning these new procedures, please
call to discuss your concerns.
Very truly
yours,
Bailey, Carr
& Co.
Certified
Public Accountants
